Michael McGrath (Cork South Central, Fianna Fail)
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The Rent a Room scheme was introduced in Finance Act 2001 as an incentive to encourage individuals to let rooms in their principal private residence as residential accommodation in order to bring about an increase in the availability of rental accommodation.

In accordance with section 216A of the Taxes Consolidation Act 1997, an individual who lets a room or rooms in her or his sole or main residence as residential accommodation may be exempt from income tax, PRSI and USC in respect of income from the letting where the aggregate of the gross rents and any sums for meals or other services supplied with the letting does not exceed the threshold for the year in question, which is €14,000 for 2023. Although the relief applies automatically, the amount of exempt rental income must be included in the individual’s tax return for the year in question.

It is also important to note that a wide array of tax reliefs and exemptions are already available for landlords and the property sector. The combined cost of these, in tax receipts forgone, is significant. For landlords subject to income tax, the current position is that, after the deduction of allowable expenses, rental income is subject to tax as part of the total taxable income of the landlord. Individual landlords may therefore be subject to income tax at their marginal rate of tax in addition to which USC and PRSI will also apply.

As the Deputy will appreciate, decisions regarding tax incentives and reliefs are normally made in the context of the annual Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. These guidelines make clear that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures, where a tax-based incentive is more efficient than a direct expenditure intervention.

Furthermore, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any matters that might be the subject of Budget decisions.